Duty of Loyalty

News & Analysis as of

Court Of Chancery Explains Unfair Dealing Law In Cash-Out Case

Aside from the very large damage award, this decision should be noted for its thorough analysis of the duties of a controlling stockholder and his aides in the way they act to carry out a going private transaction....more

CLIENT ALERT: Court Finds Dole Food Company Directors Liable; Awards $148M in Damages

In re Dole Food Company, Inc. Stockholder Litigation, Consolidated C.A. No. 8703-VCL - In re Appraisal of Dole Food Company, Inc., Consolidated C.A. No. 9079-VCL - In a much anticipated post-trial decision, the...more

In re General Motors Company Derivative Litig., C.A. No. 9627-VCG (Del. Ch. June 26, 2015) (Glasscock, VC)

In this memorandum opinion, the Court of Chancery dismissed a derivative complaint under Rule 23.1, finding that plaintiffs failed to show that the board of directors (the “Board”) of General Motors Company (“GM”) acted in...more

Focus on Private Equity - July 2015

What Private Equity Funds Should Know About ERISA: Basics of ERISA Coverage - The Employee Retirement Income Security Act of 1974, as amended (ERISA) imposes numerous duties on fiduciaries holding employee benefit...more

Declaration of Independence: Preserving the Role of the Independent Fiduciary Post-Dudenhoeffer

In the wake of Fifth Third v. Dudenhoeffer, a complaint that seeks to hold an ERISA fiduciary liable for failing to divest a plan of employer stock based solely upon publicly available information fails to state a plausible...more

Appellate Decision Teaches New Jersey Employees How To Remove Confidential Documents and Trade Secrets from Employers

Like the hit show "How to Get Away with Murder," the recent New Jersey ruling in Spencer Sav. Bank SLA v. McGrover (App. Div. March 5, 2015), instructs employees looking to remove their employers' confidential documents and...more

MSSP Final Rule ACO Eligibility Requirements, Application and Renewal Process

This is the second post in Health Care Law Today’s series on the final rule. This post addresses Eligibility Requirements, and the Application and the Renewal Process. ACO Eligibility Requirements - Under the...more

May Court Decision Round-Up

Nedschroef Detroit Corp. v. Bemas Ents. LLC, Case No. 14-10095, 2015 WL 2453511 (E.D. Mich. May 22, 2015). U.S. District Judge Linda V. Parker granted summary judgment in favor of plaintiff Nedschroef Detroit Corp...more

2015 Legislative Changes to Florida's Limited Liability Company Act

During the 2015 legislative session, the Florida legislature adopted amendments to Chapter 605 of the Florida Statutes. Chapter 605 is the Florida Revised Limited Liability Company Act (Florida Revised LLC Act). The bill...more

4 Things to Know Before Joining a Nonprofit’s Board

You’ve been asked to serve on the board of a nonprofit organization. Congratulations—you can render a real service to the community! Attorneys do make great nonprofit directors, but before you sign on, here are four things...more

CLIENT ALERT: Delaware Supreme Court Establishes Rule Permitting Dismissal of Independent Directors From Entire Fairness Suits

In re Cornerstone Therapeutics Inc. S’holder Litig., No. 564, 2014 (Del. May 14, 2015) & Leal v. Meeks, No. 706, 2014 (Del. May 14, 2015) In these interlocutory appeals, the Delaware Supreme Court resolved a...more

France: The Versailles Court of Appeal fine-tunes the duty of loyalty owed by Managing Directors

A Managing Director of a French Société Anonyme has a statutory duty of loyalty towards the shareholders of such company. This principle was set in stone by a ruling of the French Supreme Court (Cour de cassation) in 1996. It...more

“A letter of intent is the invention of the devil [that] should be avoided at all costs.” -- Stephen R. Volk, Esq. regarding the...

A Dallas jury recently reminded us why Mr. Volk lamented letters of intent. Enterprise Products Partners, L.P. is currently appealing that jury’s finding of $319MM in actual damages and $914MM for improper benefits due to...more

Striking Out A-Rod: The Faithless Servant Doctrine

The Alex Rodriguez (“A-Rod”) saga is playing out like a classic Greek tragedy. With hubris-laced legal soliloquies and a sports media dutifully taking on its role as the Chorus, all that appears to be missing is the blind...more

TVI Corp. v. Gallagher, C.A. No., 7798-VCP (Del. Ch. Oct. 28, 2013) (Parsons, V.C.)

In this memorandum opinion, the Court of Chancery denied defendants’ motion to dismiss a derivative action in part and granted it in part, holding, among other things, that plaintiffs had satisfactorily alleged demand...more

Delaware Chancery Court Permits Shareholder to Bring Fiduciary Claim for Board’s Violation of a Stock Incentive Plan

On November 8, the Delaware Chancery Court denied a motion to dismiss a derivative action brought by a shareholder of Healthways, Inc. against the company’s president, Ben Leedle, Jr., and the board of directors for approving...more

The Perils of In-House Counsel Simultaneously Representing Company and Employee

In Yanez v. Plummer (Nov. 5, 2013, C07026), the Third Appellate District issued an opinion highlighting the perils for an in-house lawyer who simultaneously represents the company and an employee. Union Pacific fired Michael...more

Employer’s Lawyer Who Defended Employee At Deposition May Be Liable To The Employee For Malpractice

Corporations may have free speech rights (Citizens United v. FEC, 558 U.S. 310 (U.S. 2010)) but they can’t talk. Thus, any deposition testimony must come from the mouths of people who are the agents, employees and directors...more

Zimmerman v. Crothall, C.A. No. 6001-VCP (Del. Ch. Oct. 14, 2013) (Parsons, V.C.)

This memorandum opinion addressed several post-trial motions in a derivative action pursuant to which the plaintiff and unitholder, Zimmerman, sued nominal defendant, Adhezion Biomedical, LLC (“Adhezion”), certain of...more

In re Trados S'holder Litig., Consol. C.A. No. 1512-VCL (Del. Ch. Aug. 16, 2013) (Laster, V.C.)

A former common stockholder filed a purported class action for breach of fiduciary duty arising out of the transaction, alleging that the former Trados directors breached their duty of loyalty by favoring the interests of the...more

The Latest Word From The Supreme Court Of Canada On Conflicts Of Interest: Canadian National Railway Co. V. Mckercher LLP

The Supreme Court of Canada shed a bit more light on the “bright line rule” for determining when a conflict exists when a law firm represents clients whose interests are adverse in the recent decision of Canadian National...more

Kalisman v. Friedman – A California Analysis

A few months ago, Vice Chancellor J. Travis Laster issued an interesting decision involving director inspection rights and the attorney-client privilege. Kalisman v. Friedman, 2013 Del. Ch. LEXIS 100 (April 17, 2013). ...more

Dissident Director Who Harms Corporation To Further Personal Objectives Violates Duty Of Loyalty

I. Director Duty of Loyalty - Directors owe fiduciary duties to a corporation on whose Board of Directors (“Board”) they serve and effectively to all of its stockholders. The fiduciary duty of loyalty dictates that...more

Virginia Federal District Court Dismisses Shareholder Derivative Action Related To Credit Card Issuer’s Settlements With OCC, CFPB

On June 21, the U.S. District Court for the Eastern District of Virginia dismissed a shareholder derivative action against a national bank’s officers and directors that was based on the bank’s settlements with the CFPB and...more

New Hampshire LLCs: New Statute & Increased Protections

A new statute, RSA 304-C, governing limited liability companies in New Hampshire went into to effect January 1, 2013. The new act, which entirely modifies the law governing LLCs in New Hampshire, is designed to be...more

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